The Special Competitive Studies Project (SCSP), a nonprofit, nonpartisan initiative focused on America's long-term competitiveness in emerging technologies, warns that proposed changes to federal research grant regulations could weaken the innovation engine behind U.S. technological leadership. The Office of Management and Budget (OMB) has proposed the most sweeping revision in years to rules governing federal grants and research awards, prompting SCSP to file formal comments urging revisions before finalization.
Ylli Bajraktari, president of SCSP, emphasized that while accountability for taxpayer dollars is essential, the proposed rules risk damaging the scientific enterprise without clear limits. "Political accountability and scientific expertise are not enemies," he said in a recent article. "But applied without clear limits, the rule risks damaging the innovation engine that has been the backbone of America's scientific success."
Key concerns include senior political appointees reviewing every discretionary award, reviewers being directed to weigh presidential policy priorities, peer review being downgraded to 'advisory,' and the ability to terminate active research awards if priorities shift. Bajraktari argues that such provisions could politicize grant decisions and introduce instability.
The stakes are measurable, according to SCSP's 2026 Tech Competition Scorecard, which reveals that China holds a decisive lead in robotics for advanced manufacturing and is eroding the narrow U.S. lead in quantum computing. Meanwhile, the federally funded share of national R&D dropped by nearly one-third between 2010 and 2019, and federal AI research spending remains far below the $32 billion annual recommendation of the National Security Commission on Artificial Intelligence. "America already faces a funding gap," Bajraktari said, "and should not compound it with a confidence gap."
The proposed changes borrow from a termination-for-convenience model used in government contracting, but research grants differ fundamentally. A grant supports multiyear experiments, doctoral researchers, and laboratory partners with custom equipment and long-term data generation. Stopping such work midstream destroys value that reimbursement cannot recover, and the ripple effects extend to companies, investors, national labs, and startups that rely on the stability of federally funded research.
"When award decisions look political rather than technical, or when a grant can vanish because priorities shifted, private partners hedge, talent looks elsewhere, and the whole geometry of innovation weakens," Bajraktari noted.
SCSP's comments to OMB outline four critical points:
First, keep merit at the center. Scientific and technical merit, evaluated by qualified experts, should remain the primary basis for selecting research proposals. Senior appointees should have oversight roles in compliance, security, and program fit, but should not substitute their judgment for expert evaluation of scientific quality. Any override should be documented in writing against published criteria.
Second, make awards durable. Competitively awarded research grants should not be terminable simply because policy priorities changed after the fact. Termination should be reserved for legal violations, security concerns, or performance failures, with recipients given a chance to respond and wind down responsibly.
Third, account for the private sector. Agencies should assess whether changes will deter co-investment, interrupt commercialization pathways, or push globally mobile talent toward competitors.
Fourth, assess the competitive impact. OMB's analysis only counts paperwork costs and calls them modest, but forgone discoveries and deterred capital are real national security costs. Major changes to federal research policy should come with a technology-competitiveness impact assessment.
SCSP also urged OMB to slow down. An October 1 effective date would impose new selection and termination frameworks on fiscal year 2027 awards before agencies have built the procedures to implement them well. To learn more, visit scsp.ai.
